August 5, 2005

Iran says EU offers to back oil pipeline from C.Asia

by ssavage

TEHRAN (Reuters) - Iran said on Friday the European Union
had offered to back it as the main oil transit route from
Central Asia to tempt Tehran to freeze its nuclear fuel work,
but a summary of the EU's proposals contained no such offer.

Iran, home to the world's second-largest oil and gas
reserves, has long promoted itself as an alternative route for
delivering land-locked Caspian oil to world markets, but has
met opposition from the United States, its political rival.

"In the proposal, they have supported the idea of Iran
being the main energy transit route to Europe from Central
Asia," a senior Iranian close to the EU negotiations told
Reuters.

But a summary of the package delivered to Iran by Britain,
France and Germany made no mention of supporting an Iranian oil
pipeline. "The summary contains all the substance of the full
proposals," an EU diplomat said in Brussels.

In reference to energy, the proposal says the EU is
prepared to declare Iran a long-term source of oil and gas.

Asked later if the EU was ready to support such an oil
transit pipeline from Central Asia to Europe, a senior French
official told Reuters: "There are a lot of ideas. Here, we
haven't gone into a lot of detail.

"We are certainly ready to envisage discussing with them
European energy supplies, different routes -- oil and gas
pipelines -- and to help them with the installation of these
infrastructures."

An EU diplomat in Washington said there were no specifics
yet.

"There is a commitment to talk about pipelines but there
isn't a specific pipeline commitment. There is an offer to sit
down and seriously discuss pipelines, not just pipelines to
Europe but other pipelines as well," the diplomat said.

The diplomat also said it was too early to say the EU3
supported the idea of Iran being the main energy transit route
to Europe from Central Asia.

"No, it's not that specific. That may well be what it ends
up being a discussion about but the proposal is not that
specific."

Iran has threatened to resume uranium processing, a move
that would end two years of talks and could lead to its
referral to the U.N. Security Council for possible sanctions.

"Declaring Iran a route for Caspian oil would not be an
incentive at all," said an Iranian analyst.

The main route now for crude from Kazakh oilfields to world
markets is via the Caspian Pipeline Consortium to a terminal
near the Black Sea port of Novorossiisk.

A rival pipeline through Turkey, the Baku-Tbilisi-Ceyhan
route, is to start carrying Azeri crude in the autumn, with
capacity set to rise to one million barrels per day by the end
of the decade.

Washington, keen to bypass Russia and Iran, has backed the
route via Turkey.

A senior official from the Turkish Energy Ministry insisted
that Turkey was the most suitable route for transporting
Central Asian oil and gas to Europe.

"There is no chance of the project which the EU is said to
support coming to fruition," the official told Reuters.

He said there was no way the United States and Russia would
look favorably on such a project.